## Solar System Optimization Case Study

This case study compares two proposals, one from Addin’ Solar and another from a leading local solar installation company.

The subject property is a ~ 3600 sq. ft. North Phoenix single family home, 30 years old, not very energy efficient, with a 40’ non-heated swimming pool, and all electrical household appliances. The annual electricity consumption is around 32,700 kWh.

The solar company has estimated that for the best results offsetting 92% of the grid supplied electricity is required. For that, a 17 kWdc solar PV generating system for a total price of $56,000 is proposed. Such a system, according to the Discounted Cash Flow (DCF, 4% discount rate) analysis using the company assumptions, would result in the $23,448 Net Present Value (NPV) to the customer which corresponds to the 142% Return on Investment (RoI) in the 25 years.

Optimization of the system size resulted in reduction of the proposed system DC rating to mere 12 kWdc at a total price of $40,000. DCF analysis of the optimized system produced the values of NPV=$19,166 and RoI=148% (See Picture 1; click to expand).

Clearly, the smaller (optimized) system right away would have saved $16,000 in customer’s pocket providing higher economic return than the originally proposed larger system. The difference is even greater if the project economics is evaluated for the 15 years term, of which projections are more certain.

In 15 years, the NPV and RoI values for the 17 kWdc system are $1,377 and 102%, respectively. For the 12 kWdc optimized system NPV=$5,348 and RoI=113%. According to the latter, the extra $16,000 spent on the system would have not paid off in 15 years.

The $16,000 system cost savings can be increased even further by implementing the “cost plus” IPM approach. This means that the customer pays only for direct cost of the system components, installation labor, permits and balance of system (BoS) plus a management fee, in this case $3,500.

The IPM planner program estimated the total cost of the 12 kWdc system installation to be just under $31,000 – another $9,000 onspot saving for the customer! The economic indices after the installation cost reduction would increase as follows: 15 years NPV=$11,519 and 15 years RoI=138% (See Picture 2, click to expand).

Conclusion: IPM including design optimization for a grid-tied solar PV system can save customers as much as 45% of their system cost while increasing return on investment by 26% and future savings by more than 8 times within the first 15 years of the system operation.